What’s a Healthy Prime Cost?

You’re probably thinking, “So I just add up the inventory that sold and what I paid my servers… and I’ve got my prime cost. And if that adds up to be less than 60% of all of my sales, I’m good. Right?”

Maybe.

If you’ve calculated your COGS carefully and included what you’ve paid employees in addition to the costs that come along with running payroll in your prime cost… you might be good.

And if you’re figuring your prime cost on a consistent and frequent basis, you might be better than good.

If you’re comparing your prime cost from day to day or week to week and making adjustments either in inventory or people power based on your analysis, we bet you’re on the right track.

But before you pat yourself on the back and move on in your to-do list, let’s be crystal clear about the importance of figuring out your prime cost.